Bribery Act a 'wake-up call' for corporate Britain

New bribery laws, which could put workers behind bars and hit companies with unlimited fines, have received Royal Assent and mark the start of a tough new era for corporate Britain

If bribes are paid by or on behalf of an organisation, the company will have to demonstrate that it has ‘adequate procedures’ in place to prevent corrupt business practices or face the penalties.  Guidance on these procedures is likely to be issued by the Ministry of Justice in June or July but will not be prescriptive.   The guidance is likely to cover anti-bribery policies, training of staff, corporate entertainment and gifts, and better due diligence on agents and business partners.

Having been pushed through Parliament before the election, the Act is likely to come into force on 1 October 2010. This gives businesses a short window of opportunity to review their systems and procedures to avoid falling foul of the new law.

The Bribery Act introduces a general offence of offering or receiving bribes, a specific offence of bribing a foreign public official, and a corporate offence of failing to prevent bribery.   According to recent research by Eversheds, which canvassed the views of almost 700 executives, 60% of businesses are unaware of the corporate offence of failing to prevent bribery and one in four board directors don’t know that they could face prosecution.

Neill Blundell, Head of the Fraud Group at Eversheds, said: “The Bribery Act is now a reality and businesses need to be aware of the penalties they could face if they don’t comply. The UK has previously been criticised for its approach in dealing with major bribery cases, so this is a significant step change that will go far beyond the scope of the US Foreign Corrupt Practices Act.   This truly is a wake-up call for corporate Britain.”

Eversheds’ Corruption Clampdown report reveals a lack of knowledge and understanding about the new laws, even at the top of UK businesses. The report found that one in five (20%) organisations don’t have robust systems to prevent bribery from taking place and there is also confusion about what constitutes bribery.

While three quarters (73%) of those surveyed understand more explicit forms of bribery – giving or receiving an illicit payment – there was a lack of awareness of the more discreet forms that will be covered by the Act, such as offering a commercial advantage or offering and receiving lavish gifts.

Neill Blundell, commented: “It is worrying that our research identified a real lack of awareness and understanding in relation to the Bribery Act – particularly when it comes to the new corporate offence of failing to prevent bribery - and that many businesses aren’t set up to minimise their exposure to corrupt business practices.

“These are serious laws with tough penalties and businesses need to take steps to minimise their risk by showing that they have actively taken steps to prevent bribery. This includes delivering training on ethical business practice from board level down, and ensuring that there is a policy in place, which is communicated throughout the organisation.

“Fraud affects all sectors and businesses of all sizes. While companies will never be able to stop certain individuals from engaging in dishonest practices, they have to demonstrate that they have taken steps to stamp out bribery and corruption.”

 Businesses who wish to find out more about the Bribery Act can visit to request a copy of the Corruption Clampdown report and to view Eversheds’ video, Bribery and Corruption: What your business needs to know.

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